Simple math to put `energy independence’ into perspective

As the presidential campaign heats up, so does the energy rhetoric, and one of the most popular topics lately has been “energy independence.”

As I noted in last week’s column, Shell’s recent setbacks in the Arctic serve as a reminder of the elusive nature of oil independence is. The projects we need to boost domestic production are more expensive and complicated than any in our history, and they will be prone to setbacks, as Shell has demonstrated. That doesn’t mean we shouldn’t be boosting domestic drilling — we need to continue the successes of recent years — but we need a realistic understanding of where things are heading.

We currently import slightly less than 9 million barrels of oil a day. Prudhoe Bay, the biggest field ever found in the U.S., never produced more than 1.5 million barrels a day. We’ve found one field that size in about 100 years worth of drilling in this country. To close the import gap, then, we need to find a field or fields that produce six times as much as the biggest find ever. While we don’t know how much oil lurks below the east and west coasts, beneath the Arctic waters or deep in the Gulf of Mexico, or remains trapped in shale formations, it’s unlikely that all of it combined would produce 9 million barrels a day.

And if it did, it would take more than a decade for much of it to come into production, so it’s not going to happen in this election cycle, or even the next one.

Let’s say, though, that we managed to do all that. Then what? As Shell’s Arctic setbacks demonstrate, these types of projects are expensive and time-consuming. Many also have steep decline rates — the rate at which production falls after the initial discovery. Combating the steep decline rates means the need to drill even more wells, just to maintain the same level of production. As I noted recently in discussing Republican Mitt Romney’s energy plan, decline rates in the Eagle Ford Shale can top 40 percent, which means it will take almost 800 new wells, at a cost of about $8 billion, just to keep production at the current level. Energy independence isn’t a static goal, it’s a level that once achieved, has to be maintained by continuing to develop more reserves than we use.

Then there’s the final kicker, which brings us back to the price issue. Long before the U.S. achieved oil independence, the decline in imports from the world’s biggest crude importer would drive prices down on the world market, at least in the short term. Suddenly, the expensive domestic drilling projects wouldn’t be economical because imports would be cheaper. So we’d once again be back to importing.

Oil independence shouldn’t be the goal. The goal should be a long-term, diverse fuel mix. That will make our economy better able to weather price shocks in any single commodity. We need to end this herky-jerky, reactionary approach to energy development, and the first step is to take a more realistic look at existing resource picture and stop deluding ourselves about oil independence.